The FERS retirement annuity is computed based on your length of service and "high-3" average pay. The high-3 FERS annuity is calculated by adding your highest salary for three consecutive years, then dividing the amount by three. Usually this is your last three years of federal service. The high-3 average pay includes locality pay and annual premiums for standby duty and availability if applicable. Other pay such as differentials, overtime, allowances and others are not included.
Generally, your regular FERS retirement annuity is calculated according to this formula:
To determine your length of service for computation, add all of your periods of creditable service, then eliminate from the total any fractional part of a month (less than 30 days).
Depending on the category of retirement benefits you receive, your benefit may be reduced as described in the Retirement Options section. For example, the total could be reduced if you elect to retire at the minimum retirement age before completing 30 years of service.
FERS employees are eligible for a retirement annuity at the Minimum Retirement Age (MRA) with just 10 years of service. However, if you retire at the Minimum Retirement Age (MRA) with 10 service, but less than 30 years of service, your benefit will be reduced by the age reduction.
Age Reduction - Your MRA annuity will be reduced by 5 percent per year (5/12 of 1 percent for each month) in which your retirement date precedes your 62nd birthday. However, you can postpone the commencing date of your annuity to reduce or eliminate this age reduction.
Computation of an MRA retirement: (1% x high-3 salary x years of service) – age reduction = MRA annuity
There is a difference between a postponed and a deferred FERS retirement.
A deferred retirement means that you are not fully eligible for a retirement annuity, but you can apply for the deferred retirement when you are eligible, such as when you reach the MRA. For example, if you are 50 years old with 18 year of service, you can apply for a deferred retirement when you reach your MRA of 57 years old.
A postponed retirement means that you are fully eligible for an immediate MRA +10 retirement annuity, but you elect to delay the retirement to reduce or eliminate the age reduction. For example, you are at your MRA of 56 with 20 years of service. You elect to postpone the start of your annuity until you are 60, you avoid the age reduction.
Postponed example 2: If you retire at age 56 with 10 years of service, you are 6 years away from age 62. Your retirement benefit checks will be reduced by 30% if you start receiving your annuity right away. In contrast, if you wait until age 58, the reduction in your payments would be 20%.
If you choose to postpone the starting date of your annuity, your FEHB and FEGLI coverage will terminate. When you start receiving your annuity, you may reinstate your FEHB and FEGLI coverage if you met the eligibility requirements to continue coverage into retirement when you left Federal employment. This does not apply to a deferred retirement because they are not eligible for an immediate annuity when they left Federal service.
If you meet certain requirements, you will receive a Special Retirement Supplement which is paid as an annuity until you reach age 62. This supplement is fairly similar to the Social Security benefit earned while you were employed by the Federal government. However, since the formula for the Special Supplement assumes a working life of 40 years, each year of FERS service is worth one-fortieth of the estimated Social Security benefit. Therefore, the FERS Supplement is often significantly less than your Social Security benefits. The supplement ends at age 62 even if you elect to wait to apply for Social Security benefits.
You may be eligible for a Special Retirement Supplement if you retire:
If you transfer to the Federal Employees Retirement System (FERS) from the Civil Service Retirement System (CSRS), you must have at least one full calendar year of FERS-covered service to qualify for the supplement.
If you have earnings from wages or self-employment that exceed the Social Security annual exempt amount ($19,560 in 2022), your Special Retirement Supplement will be reduced or stopped. After reaching the MRA, retirees who are receiving the annuity supplement are required to report earnings annually to OPM
NOTE: The retiree annuity supplement terminates at approximately age 62, whether or not the retiree is entitled to or applies for Social Security benefits at that time. The retiree annuity supplement is not increased by cost-of-living adjustments (COLA's). Reference CSRS/FERS Handbook Chapter 51, Subchapter FERS, Part 51A4.
You can calculate your Social Security Offset through one of several calculators that we offer on this site.
FERS employees will be able to use the Projected Annuity Calculator spreadsheet even though it was originally designed for CSRS retirements. FERS employees projected annuity without survivor benefits will be the same; just enter your annuity estimate, age, year of retirement, what you consider to be a realistic growth rate, and the spreadsheet will calculate your annuity for the next 40 years!
Projected Annuity Calculator (Excel Form)
The column reserved for your projected annuity with survivor benefits will be slightly lower since the maximum spousal benefit is 50% for FERS, not the 55% for CSRS. Also, the full FERS annuity will cost the retiree a little more because FERS employees pay 10% of their annuity for a full survivor’s benefit where CSRS pay just under 10%. FERS COLAs are also weighted and adjusted down when the COLA exceeds 2%.
Effective immediately, OPM is accepting the current FERS Application to Make a Deposit, SF 3108, from employees wanting to make a FERS redeposit. Employees must indicate on the application that the period of service was refunded and send the completed application through your agency for certification.
Please do not submit a payment with the application. OPM’s financial policy requires all payments be sent to OPM’s Funds Management office. If a payment is sent to OPM before the service credit account is established, Funds Management will not be able to identify where to apply the payment. As soon as the Service Credit office processes the application, a bill and instructions for making payments will be sent to the employee. Mail the completed FERS application (SF 3108) to:
Prior to enactment of the NDAA, FERS employees who separated from federal service and were paid a refund of their FERS retirement deductions permanently forfeited all retirement credit for the service covered by the refund. If the FERS refund included a refund of CSRS deductions covering CSRS service that became subject to FERS rules, employees permanently forfeited all retirement credit for that CSRS service as well. If that individual returned to work for the Government in a position covered under FERS, the employee could not repay (or redeposit) the refunded FERS and CSRS deductions. The service covered by the refunded deductions could not be used in determining when the employee would become eligible to retire and it could not be used in computing the amount of the employee’s annuity. Section 1904 of the National Defense Authorization Act (NDAA) now permits individuals who are subsequently reemployed to make a redeposit of the amount refunded, plus interest, and to have credit for the service reinstated. For the purpose of survivor annuities, redeposit may also be made by survivors.
Interest is based on the same basic rules applicable to CSRS as described in 5 U.S.C. 8334 and 5 CFR 831.105. Interest will accrue annually on the outstanding portion of any amount that may be redeposited and is compounded annually, until the portion is deposited. The interest is computed from the date the refund was paid through December 31 of the year before the one in which the redeposit is paid in full.
Section 1904 applies to individuals who are employed under FERS on or after October 28, 2009. Individuals retiring on or after October 28, 2009, and employed under FERS will be given the opportunity to make the redeposit upon the adjudication of their benefit.